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MAY 1, 1999
SUPPLEMENTED FEBRUARY 29, 2000 PROSPECTUS
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MERRIMAC SERIES
MERRIMAC TREASURY SERIES - PREMIUM CLASS
MERRIMAC TREASURY PLUS SERIES - PREMIUM CLASS
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A CRIME.
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CONTENTS Page
THE FUNDS
RISK/RETURN SUMMARIES
Treasury Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Treasury Plus Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
FUNDS' INVESTMENTS
Treasury Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Treasury Plus Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
FUNDS' MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
YOUR INVESTMENT
SHAREHOLDER INFORMATION
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Valuation of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . .9
Federal Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..10
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Description of Securities in Which the Portfolios Can Invest
FOR MORE INFORMATION
Back Cover
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RISK/RETURN SUMMARIES
The following information is only a summary of important information that you
should know about the Merrimac Treasury Series and the Merrimac Treasury Plus
Series (the Funds) each a series of Merrimac Series. As with any mutual fund,
there is no guarantee that the Funds will achieve their goals.
Traditional mutual funds directly acquire and manage their own portfolio
securities. The Funds are organized in a "master-feeder" structure, under which
each Fund invests all of its assets in a corresponding series of Merrimac
Master Portfolio (each, a Portfolio). Each Fund and its corresponding Portfolio
have substantially the same investment objectives and investment policies.
MERRIMAC TREASURY SERIES
> WHAT IS THE FUND'S INVESTMENT OBJECTIVE AND MAIN STRATEGY?
The Merrimac Treasury Series' investment objective is to achieve a high
level of current income consistent with preserving principal and liquidity.
M&I Investment Management Corp. (M&I), the sub-adviser of Merrimac Treasury
Portfolio, attempts to achieve the Fund's objective by investing the
Portfolio's assets in U.S. Treasury securities with maturities of 397
calendar days or less. The Portfolio will only invest in direct obligations
of the U.S. Treasury, such as U.S. Treasury bills, notes and bonds or in
other mutual funds that invest in such instruments, subject to regulatory
limitations.
> MAIN RISK OF INVESTING IN THE FUND
The primary risk in investing in the Fund is interest rate risk which
involves the possibility that the value of the Fund's investments will
decline due to an increase in interest rates. In view of the risks inherent
in all investments in securities, there is no assurance that the Fund's
objective will be achieved. See Funds' Investments for more information.
Money market funds can be confused with savings accounts. The Fund is not a
savings account but, rather, a money market mutual fund that issues and
redeems at the Fund's per share NAV. The Fund always seeks to maintain a
constant NAV of $1.00 per share.
Unlike a savings account, however, an investment in the Fund is not a
deposit of Investors Bank & Trust Company, or any other bank, and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency. Although the Fund seeks to preserve the value of
your investment at $1.00 per share, it is possible to lose money by
investing in the Fund.
> IS THE FUND FOR YOU?
The Fund may be appropriate as part of your investment portfolio if......
o You need your money back within a short period.
o You need to preserve principal.
o You want a low-risk investment.
o You do not need a high total return to achieve your goals.
o You do not seek long-term growth as your primary goal.
> COULD THE VALUE OF YOUR INVESTMENT IN THE FUND FLUCTUATE?
Yes, it could. The Fund is managed in accordance with strict SEC guidelines
designed to preserve the Fund's value at $1.00 per share, although, of
course, there cannot be a guarantee that the value will remain at $1.00 per
share. The value of your investment typically will grow through reinvested
dividends.
1
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> TOTAL RETURN*
All mutual funds must use the same formula to calculate total return. The
bar chart and average annual total return table demonstrates the risks of
investing in the Fund. Past performance does not necessarily indicate what
will happen in the future. For the Fund's most current yield information you
may call 1-888-MERRMAC.
[Add chart here.]
During the period shown in the bar chart, the highest total return for a
quarter was 1.14% (quarter ending December 31, 1999) and the lowest total
return for a quarter was 0.99% (quarter ending March 31, 1999).
PERIODS ENDED DECEMBER 31, 1999
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1 YEAR LIFE OF FUND INCEPTION DATE
Treasury Series-Institutional Class 4.26% 4.28% June 25, 1998
* The PREMIUM CLASS commenced operations on February 19, 1999 and therefore does
not have a full year of performance information to report for the period
ended December 31, 1999. The performance information provided is for the
Fund's INSTITUTIONAL CLASS which is not offered in this prospectus. However,
the PREMIUM CLASS shares are invested in the same portfolio of securities
and the annual returns would differ only to the extent that the classes do
not have the same expenses.
> FEES AND EXPENSES
These tables describe the fees and expenses that you may pay if you buy and
hold shares of the Fund. There are no fees or sales loads charged to your
account when you buy or sell Fund shares.
ANNUAL FUND OPERATING EXPENSES - EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Premium Class
Management Fees 0.17%
Distribution (12b-1) Fees None
Other Expenses 0.11%
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Total Annual Fund Operating Expenses (1) 0.28%
-----
-----
_________________
(1) This table and the example below reflect the Fund's actual expenses for the
fiscal year ended December 31, 1999 and the Fund's share of the Portfolio's
estimated expenses. The Institutional Class had total annual fund
operating expenses of 0.53% for the fiscal year ended December 31, 1999.
> EXAMPLE
This example is intended to help you compare the cost of investing in the
PREMIUM CLASS of the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the PREMIUM CLASS of the Fund
for the time periods indicated and then redeem all of your shares at the end
of those periods. The example also assumes that your investment has a 5%
return each year and that the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Premium Class $29 $90 $157 $356
2
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MERRIMAC TREASURY PLUS SERIES
> WHAT IS THE FUND'S INVESTMENT OBJECTIVE AND MAIN STRATEGY?
The Merrimac Treasury Plus Series' investment objective is to achieve a high
level of current income consistent with preserving principal and liquidity.
M&I, the sub-adviser of Merrimac Treasury Plus Portfolio, attempts to
achieve the Fund's objective by investing the Portfolio's assets in
high-quality, U.S. dollar-denominated, money market instruments with
maturities of 397 calendar days or less. The Portfolio will invest primarily
(at least 65% of total assets) in direct obligations of the U.S. Treasury,
such as U.S. Treasury bills, notes and bonds. The Portfolio may invest the
remaining 35% of its total assets in securities issued or guaranteed by the
U.S. Government or its agencies. The Portfolio also may invest in repurchase
agreements that are collateralized by these instruments.
> MAIN RISKS OF INVESTING IN THE FUND
The primary risks in investing in the Fund are interest rate risk and credit
risk.
o INTEREST RATE RISK involves the possibility that the value of the Fund's
investments will decline due to an increase in interest rates.
o CREDIT RISK involves the possibility that an issuer of a security owned by
the Fund has its credit rating downgraded or defaults on its obligation
to pay principal and/or interest.
In view of the risks inherent in all investments in securities, there is no
assurance that the Fund's objective will be achieved. See Funds' Investments
for more information.
Money market funds can be confused with savings accounts. The Fund is not a
savings account but, rather, a money market mutual fund that issues and
redeems at the Fund's per share NAV. The Fund always seeks to maintain a
constant NAV of $1.00 per share.
Unlike a savings account, however, an investment in the Fund is not a
deposit of Investors Bank & Trust Company, or any other bank, and is not
insured or guaranteed by the FDIC or any other government agency. Although
the Fund seeks to preserve the value of your investment at $1.00 per share
it is possible to lose money by investing in the Fund.
> IS THE FUND FOR YOU?
The Fund may be appropriate as part of your investment portfolio if......
o You need your money back within a short period.
o You need to preserve principal.
o You want a low-risk investment.
o You do not need a high total return to achieve your goals.
o You do not seek long-term growth as your primary goal.
> COULD THE VALUE OF YOUR INVESTMENT IN THE FUND FLUCTUATE?
Yes, it could. The Fund is managed in accordance with strict SEC guidelines
designed to preserve the Fund's value at $1.00 per share, although, of
course, there cannot be a guarantee that the value will remain at $1.00 per
share. The value of your investment typically will grow through reinvested
dividends.
3
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> TOTAL RETURN
The Fund commenced operations on January 22, 1999 and therefore does not
have a full year of performance information for the period ended December
31, 1999. For the Fund's most current yield information you may call
1-888-MERRMAC. Past performance does not necessarily indicate what will
happen in the future.
> FEES AND EXPENSES
These tables describe the fees and expenses that you may pay if you buy and
hold shares of the Fund. There are no fees or sales loads charged to your
account when you buy or sell Fund shares.
ANNUAL FUND OPERATING EXPENSES - EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PREMIUM CLASS
Management Fees 0.17%
Distribution (12b-1) Fees None
Other Expenses 0.08%
-----
Total Annual Fund Operating Expenses (1) 0.25%
-----
-----
_________________
(1) This table and the example below reflect the Fund's own estimated
expenses and the Fund's share of the Portfolio's estimated expenses.
> EXAMPLE
This example is intended to help you compare the cost of investing in the
PREMIUM CLASS of the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the PREMIUM CLASS of the Fund
for the time periods indicated and then redeem all of your shares at the end
of those periods. The example also assumes that your investment has a 5%
return each year and that the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
CLASS 1 YEAR 3 YEARS
Premium Class $26 $80
4
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THE FUNDS' INVESTMENTS
MERRIMAC TREASURY SERIES
> PRINCIPAL INVESTMENT STRATEGIES AND RISKS
Q What is the Fund's principal investment strategy?
A The Fund's principal investment strategy is to invest the Fund's share of
the Portfolio's assets in U.S. Treasury securities with maturities of 397
calendar days or less.
Q Into what types of money market instruments will the Fund's assets be
invested?
A The Portfolio may only invest in direct obligations of the U.S. Treasury,
such as U.S. Treasury bills, notes and bonds. To maximize the tax-effective
yield, the Portfolio will usually (but not always) invest in obligations
that qualify for the exemption from state taxation. Further description of
these securities is found in Appendix A.
Q Are there any limits on how much that can be invested in one issuer?
A By the Fund's strategy, the U.S. Treasury is the only issuer in which the
Portfolio invests. If, for liquidity purposes, the Portfolio invests in
other mutual funds having the same principal investment strategy, its total
investment in other mutual funds may not exceed 10% of assets and investmen
in a single fund may not exceed 5% of assets or 3% of that fund's total
assets.
Q Will the Fund always maintain a net asset value of $1 per share?
A While M&I will endeavor to maintain a constant Fund NAV of $1 per share,
there is no assurance that they will be able to do so. The shares are
neither insured nor guaranteed by the U.S. Government. As such, the Fund
carries some risk. There is a risk that rising interest rates will cause
the value of the Portfolio's securities to decline. M&I attempts to
minimize this risk by limiting the maturity of each security to 397 calendar
days or less and maintaining a dollar-weighted average portfolio maturity
for the Portfolio of 90 days or less.
Q How are the decisions to buy or sell securities made?
A Factors are balanced such as the Portfolio's objective of maximizing current
income while maintaining safety and liquidity. M&I evaluates the treasury
securities market daily to determine how to provide the most value to the
Portfolio.
5
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MERRIMAC TREASURY PLUS SERIES
> PRINCIPAL INVESTMENT STRATEGIES AND RISKS
Q What is the Fund's principal investment strategy?
A The Fund's principal investment strategy is to invest the Fund's share of
the Portfolio's assets in high-quality, U.S. dollar-denominated Treasury
securities with maturities of 397 calendar days or less.
Q Into what types of money market instruments will the Fund's assets be
invested?
A The Portfolio will invest at least 65% of its total assets in direct
obligations of the U.S. Treasury such as U.S. Treasury bills, notes and
bonds and may invest the remaining 35% of its total assets in securities
issued or guaranteed by the U.S. Government or its agencies. The Portfolio
also may invest in repurchase agreements that are collateralized by these
instruments. Further description of these securities is found in Appendix
A.
Q Are there any limits on how much that can be invested in one issuer?
A No. Beyond the percentages noted above, the Portfolio is not limited with
respect to purchases of securities issued by the U.S. Government or its
agencies.
Q Will the Fund always maintain a net asset value of $1 per share?
A While M&I will endeavor to maintain a constant Fund NAV of $1 per share,
there is no assurance that they will be able to do so. The shares are
neither insured nor guaranteed by the U.S. Government. As such, the Fund
carries some risk. There is a risk that rising interest rates will cause
the value of the Portfolio's securities to decline. M&I attempts to
minimize interest rate risk by limiting the maturity of each security to 397
calendar days or less and maintaining a dollar-weighted average portfolio
maturity for the Portfolio of 90 days or less.
Q How are the decisions to buy or sell securities made?
A Factors are balanced such as the Portfolio's objective of maximizing current
income while maintaining safety and liquidity. M&I evaluates the government
securities market compared to the repurchase agreement market to determine
which provides the most value to the Portfolio.
6
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FUNDS' MANAGEMENT
INVESTMENT ADVISER. The Funds have not retained the services of an investment
adviser because each Fund invests all of its investable assets in its
corresponding Portfolio. The Treasury Portfolio and Treasury Plus Portfolio
have retained the services of Investors Bank & Trust Company (Investors Bank)
as investment adviser. Investors Bank continuously reviews and supervises the
Treasury and Treasury Plus Portfolios' investment program. Investors Bank
discharges its responsibilities subject to the supervision of, and policies
established by the Board of Trustees. Investors Bank's business address is 200
Clarendon Street, Boston, Massachusetts 02116. The Treasury Portfolio and
Treasury Plus Portfolio each pay Investors Bank a unitary fee for servicing
these Portfolios as Investment Adviser, Administrator, Custodian, Fund
Accountant and Transfer Agent. The fee is computed at an annual rate of 0.17%
of average net assets (ANA) of each of these Portfolios.
INVESTMENT SUB-ADVISERS. M&I serves as investment sub-adviser to the Treasury
Portfolio and to the Treasury Plus Portfolio. M&I manages the Treasury
Portfolio and the Treasury Plus Portfolio, selects investments and places all
orders for the purchase and sale of the Portfolios' securities, subject to the
general supervision of, and policies established by the Portfolios' Board of
Trustees and Investors Bank. The business address of M&I is 1000 North Water
Street, Milwaukee, Wisconsin 53202. M&I has been providing investment advisory
services since it was established in 1973 as a first-tier wholly-owned
subsidiary of Marshall & Isley Corporation, a publicly held bank holding
company. M&I receives fees from Investors Bank (and not from each Portfolio)
for its services as investment sub-adviser. Prior to January 4, 1999, Aeltus
Investment Management, Inc. acted as investment sub-adviser for the Treasury
Portfolio and received the same fee from Investors Bank as M&I currently
receives.
> MASTER/FEEDER STRUCTURE
The Funds are "feeder" funds that invest exclusively in corresponding
"master" portfolios with identical investment objectives. The master
portfolio may accept investments from multiple feeder funds, which bear the
master portfolio's expenses in proportion to their assets.
Each feeder fund and its master portfolio expect to maintain consistent
investment objectives, but if they do not, a Fund will withdraw from the
master portfolio, receiving either cash or securities in exchange for its
interest in the master portfolio. The Trustees would then consider whether a
Fund should hire its own investment adviser, invest in a different
portfolio, or take other action.
SHAREHOLDER INFORMATION
> PURCHASES
GENERAL INFORMATION. Shares may be purchased only through the Distributor,
Funds Distributor Inc., which offers each Fund's shares to the public on a
continuous basis. Shares of each Fund may be purchased only in those states
where they may be lawfully sold. Shares are sold at the NAV per share next
computed after the purchase order is received in good order by the
Distributor and payment for shares is received by Investors Bank, the Funds'
Custodian. See the Account Application or call 1-888-MERRMAC for
instructions on how to make payment for shares to the Custodian.
Shareholders may also make general inquiries by calling 1-888-MERRMAC.
INVESTMENT MINIMUM. The minimum initial investment for Premium Class shares
of the Funds is $10 million. Institutions may satisfy the minimum investment
by aggregating their fiduciary accounts. Subsequent purchases may be in any
amount. Each Fund reserves the right to waive the minimum initial
investment. When a Premium Class shareholder's account balance falls below
$1 million due to redemption, a Fund may close the account. Such
shareholders will be notified if the minimum balance is not being maintained
and will be allowed 60 days to make additional investments before the
account is closed.
7
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Share purchase orders are deemed to be in good order on the date a Fund
receives a completed Account Application (and other documents required by
the Trust) and federal funds become available to the Fund in the Fund's
account with Investors Bank.
Purchases may be made only by wire. Wiring instructions for purchases of
shares of a Fund are as follows:
Investors Bank & Trust Company
ABA #: 011001438
Attn: [Name of Fund]
DDA #: 717171333
Name of Account
Account #
Amount of Wire:
A bank may impose a charge to execute a wire transfer. A purchaser must call
1-888-MERRMAC to inform Investors Bank of an incoming wire transfer. A
purchase order for shares received in proper form by 4:00 p.m. (ET) for the
Treasury Plus Series and by 2:00 p.m. (ET) for the Treasury Series, on a
Business Day will be executed at the NAV per share next determined after
receipt of the order, provided that Investors Bank receives the wire by the
close of business on the day the purchase order is received. A Business Day
is any day on which both the NYSE and the New York Federal Reserve Bank are
open. Purchase orders received after 4:00 p.m. (ET) for the Treasury Plus
Series and after 2:00 p.m. (ET) for the Treasury Series will be effected on
the next Business Day if cleared funds are received before the close of
business on the next Business Day. Purchase orders for shares for which
payment has not been received by the close of business will not be accepted,
and notice thereof will be given to the purchaser. The Treasury Plus Series
also may limit the amount of a purchase order received between 3:00 p.m.
(ET) and 4:00 p.m. (ET).
On days when the financial markets close early, such as the day after
Thanksgiving and Christmas Eve, all purchase orders must be received by
12:00 noon (ET) for each Fund.
Each Fund reserves the right in its sole discretion (i) to suspend the
offering of a Fund's shares, (ii) to reject purchase orders, and (iii) to
modify or eliminate the minimum initial investment in Fund shares. Purchase
orders may be refused if, for example, they are of a size that could disrupt
management of a Portfolio.
> REDEMPTIONS
Shareholders may redeem all or a portion of their shares on any Business
Day. Shares will be redeemed at the NAV next determined after Investors Bank
has received a proper notice of redemption as described below. If notice of
redemption is received prior to 4:00 p.m. (ET) for the Treasury Plus Series
and prior to 2:00 p.m. (ET) for the Treasury Series, on a Business Day, the
redemption will be effective on the date of receipt. Proceeds of the
redemption will ordinarily be made by wire on the date of receipt, but in
any event within three Business Days from the date of receipt.
Shareholder redemption requests received after 4:00 p.m. (ET) for the
Treasury Plus Series and after 2:00 p.m. (ET) for the Treasury Series on a
Business Day, will ordinarily receive payment by wire on the next Business
Day, but, in any event, within four Business Days from the date of receipt
of a proper notice of redemption. All redemption requests regarding shares
of the Treasury Plus Series placed between 3:00 p.m. and 4:00 p.m. (ET) may
only be placed by telephone.
Each Fund reserves the right in its sole discretion to suspend redemptions
or postpone payments when the NYSE is closed or when trading is restricted
for any reason or under emergency circumstances as determined by the SEC.
The Treasury Plus Series reserves the right to postpone payments for
redemption requests received between 3:00 p.m. and 4:00 p.m. (ET) until the
next Business Day.
On days when the financial markets close early, such as the day after
Thanksgiving and Christmas Eve, all redemption orders must be received by
12:00 noon (ET) for the Funds.
8
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A shareholder may elect to receive payment in the form of a wire or check.
There is no charge imposed by a Fund to redeem shares; however, in the case
of redemption by wire, a shareholder's bank may impose its own wire transfer
fee for receipt of the wire.
REDEMPTION BY WIRE. To redeem shares by wire, a shareholder or any
authorized agent (so designated on the Account Application) must provide
Investors Bank with the dollar amount to be redeemed, the account to which
the redemption proceeds should be wired (such account must have been
previously designated by the shareholder on its Account Application, the
name of the shareholder and the shareholder's account number).
A shareholder may change its authorized agent, the address of record or the
account designated to receive redemption proceeds at any time by writing to
Investors Bank with a signature guaranteed by a national bank which is a
member firm of any national or regional securities exchange (a Signature
Guarantee). If the guarantor institution belongs to one of the Medallion
Signature Programs, it must use the specific Medallion "Guaranteed" stamp.
Notarized signatures are not sufficient. Further documentation may be
required when Investors Bank deems it appropriate.
REDEMPTION BY MAIL. A shareholder who desires to redeem shares by mail may
do so by mailing proper notice of redemption directly to Investors Bank,
ATTN: Transfer Agency, OPS 22, P.O. Box 9130, Boston, MA 02117-9130. Proper
notice of redemption includes written notice requesting redemption along
with the signature of all persons in whose names the shares are registered,
signed exactly as the shares are registered. In certain instances, Investors
Bank may require additional documents such as trust instruments or
certificates of corporate authority. Payment will be mailed to the address
of record within seven days of receipt of a proper notice of redemption.
TELEPHONE REDEMPTION. A shareholder may request redemption by calling
Investors Bank at 1-888-MERRMAC. The telephone redemption option is made
available to shareholders of a Fund on the Account Application. Each Fund
reserves the right to refuse a telephone request for redemption if it
believes that it is advisable to do so. Procedures for redeeming shares by
telephone may be modified or terminated at any time by a Fund. Neither the
Funds nor Investors Bank will be liable for following redemption
instructions received by telephone that are reasonably believed to be
genuine, and the shareholder will bear the risk of loss in the event of
unauthorized or fraudulent telephone instructions. Each Fund will employ
reasonable procedures to confirm that instructions communicated by telephone
are genuine. A Fund may be liable for any losses due to unauthorized or
fraudulent instructions in the absence of following these procedures. Such
procedures may include requesting personal identification information or
recording telephone conversations. Redemption checks will be made payable to
the registered shareholder(s) and sent to the address of record on file with
Investors Bank. Payments by wire will only be made to the registered
shareholder through pre-existing bank account instructions.
No bank instruction changes will be accepted over the telephone. See
REDEMPTION BY WIRE for information on how to change bank instructions.
> VALUATION OF SHARES
Each Fund offers its shares at the NAV per share of the Fund, as determined
once each Business Day. This determination is made as of 4:00 p.m. (ET) for
the Treasury Plus Series, as of 2:00 p.m. (ET) for the Treasury Series.
Securities purchased by the Treasury Portfolio and Treasury Plus Portfolio
are stated at amortized cost, which approximates market value. For more
information on how securities are valued, see the Statement of Additional
Information (SAI).
> DIVIDENDS AND DISTRIBUTIONS
Each Fund intends to declare as a dividend substantially all of its net
investment income at the close of each Business Day and will pay such
dividends monthly. Substantially all of a Fund's distributions will be from
net investment income. Shareholders of the Treasury Series and the Treasury
Plus Series shall be entitled to receive dividends on the Business Day their
purchase is effected but shall not receive dividends on the Business Day
that their redemption is effected. Distributions of net capital gains, if
any, are made annually at the discretion of the officers of the Fund.
Dividends and/or capital gain distributions will be reinvested automatically
in additional shares of a Fund at NAV and such shares will be automatically
credited to a shareholder's account, unless a shareholder elects to receive
either dividends or capital gains distributions (or both) in cash.
Shareholders may change their distribution option at any time by writing to
Investors Bank with a Signature Guarantee prior to the record date of any
such dividend or distribution.
9
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> FEDERAL TAXES
TRANSACTIONS TAX STATUS
Sales or exchanges of shares. Usually capital gain or loss. Tax
rate depends on how long shares are
held.
Distributions of long-term Taxable as long-term capital gain.
capital gain.
Distributions of short-term Taxable as ordinary income.
capital gain.
Dividends from net investment Taxable as ordinary income.
income.
Every January, the Funds provide information to their shareholders about the
Funds' dividends and distributions, which are taxable even if reinvested,
and about the shareholders' redemptions during the previous calendar year.
Any shareholder who does not provide the Funds with a correct taxpayer
identification number and required certification may be subject to federal
backup withholding tax.
Shareholders should generally avoid investing in a Fund shortly before an
expected taxable dividend or capital gain distribution. Otherwise, a
shareholder may pay taxes on dividends or distributions that are
economically equivalent to a partial return of the shareholder's investment.
Shareholders should consult their tax advisers about their own particular
tax situations.
10
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APPENDIX A
THE FOLLOWING ARE DESCRIPTIONS OF CERTAIN TYPES OF SECURITIES IN WHICH THE
PORTFOLIOS' MAY INVEST:
REPURCHASE AGREEMENTS. Treasury Plus Portfolio may enter into repurchase
agreements, which are agreements by which a person obtains a security and
simultaneously commits to return the security to the seller at an agreed upon
price (including principal and interest) on an agreed upon date within a number
of days from the date of purchase. In substance, a repurchase agreement is a
loan by the applicable Portfolio collateralized with securities. Such lending
Portfolio's Custodian or its agent will hold the security as collateral for the
repurchase agreement. All repurchase transactions must be collateralized
initially at a value at least equal to 102% of the repurchase price and
counterparties are required to deliver additional collateral in the event the
market value of the collateral falls below 100%. The repurchase transactions
entered into by the Treasury Plus Portfolio must be collateralized by
securities issued by the U.S. Government.
RESTRICTED AND ILLIQUID SECURITIES. Each Portfolio may invest in illiquid
securities. Illiquid securities are those that are not readily marketable,
repurchase agreements maturing in more than seven days, time deposits with a
notice or demand period of more than seven days and certain restricted
securities. Based upon continuing review of the trading markets for a specific
restricted security, the security may be determined to be eligible for resale
to qualified institutional buyers pursuant to Rule 144A under the Securities
Act of 1933 and, therefore, to be liquid. Also, certain illiquid securities may
be determined to be liquid if they are found to satisfy certain relevant
liquidity requirements.
SECURITIES LENDING. Each Portfolio may lend up to 33 1/3% of its portfolio of
securities pursuant to agreements requiring that the loan be continuously
secured by cash or equivalent collateral or by a letter of credit or bank
guarantee in favor of the Portfolio at least equal at all times to 100% of the
market value plus accrued interest on the securities lent. The Portfolio will
continue to receive interest on the securities lent while simultaneously
seeking to earn interest on the investment of cash collateral. Collateral is
marked to market daily. Loans are subject to termination by the Portfolio or
the borrower at any time and are, therefore, not considered to be illiquid
investments.
VARIABLE AND FLOATING RATE INSTRUMENTS. Certain of the obligations purchased by
each Portfolio may carry variable or floating rates of interest and may include
variable amount master demand notes. A floating rate security provides for the
automatic adjustment of its interest rate whenever a specified interest rate
changes. A variable rate security provides for the automatic establishment of a
new interest rate on set dates. Variable and floating rate instruments may
include variable amount master demand notes that permit the indebtedness
thereunder to vary in addition to providing for periodic adjustments in the
interest rate. There may be no active secondary market with respect to a
particular variable or floating rate instrument. Nevertheless, the periodic
readjustments of their interest rates tend to assure that their value to such
Portfolios will approximate their par value. Further, some of the demand
instruments purchased by such Portfolios derive their liquidity from the
ability of the holder to demand repayment from the issuer or from a third party
providing credit support. The creditworthiness of issuers of variable and
floating rate instruments and their ability to repay principal and interest
will be continuously monitored by M&I, as applicable.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. Each Portfolio may invest in
when-issued and delayed delivery securities, which are securities purchased for
delivery beyond the normal settlement date at a stated price and yield, thereby
involving the risk that the yield obtained will be less then that available in
the market at delivery. The purchase of securities on a when-issued or delayed
delivery basis has the effect of leveraging. When such a security is purchased,
the Custodian will set aside cash or liquid securities to satisfy the purchase
commitment unless the relevant Portfolio has entered into an offsetting
agreement to sell the securities. These segregated securities will be valued at
market, and additional cash or securities will be segregated if necessary so
that the market value of the account will continue to satisfy the purchase
commitment. Such Portfolios generally will not pay for such securities or earn
interest on them until received. The Portfolios will only purchase when-issued
and delayed delivery securities for the purpose of acquiring portfolio
securities and not for speculative purposes. However, such Portfolios may sell
these securities or dispose of the commitment before the settlement date if it
is deemed advisable as a matter of investment strategy.
ZERO COUPON TREASURY SECURITIES. Each Portfolio may invest in zero coupon
treasury securities. Zero coupon treasury securities are securities sold at a
discount to par value and on which interest payments are not made during the
life of the security. Upon maturity, the holder is entitled to receive the par
value of the security. A Portfolio is required to accrue income with respect to
these securities prior to the receipt of cash payments.
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MERRIMAC SERIES
MERRIMAC TREASURY SERIES
MERRIMAC TREASURY PLUS SERIES
For investors who want more information about the Funds, the following
documents are available free upon request:
o STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Funds and is legally a part of this prospectus.
o ANNUAL/SEMI-ANNUAL REPORTS: The Funds' and the Portfolios' annual and
semi-annual reports provide additional information about the
Portfolios' investments.
You can get free copies of the SAI, the reports, other information and answers
to your questions about the Funds by contacting the Funds' at 1-888-MERRMAC.
You can also view the SAI and receive the reports free from the SEC's Internet
website at http://www.sec.gov. Information about the Fund (including the SAI)
may be reviewed and copied at the SEC's Public Reference Room in Washington,
D.C., or you may obtain copies, upon payment of a duplicating fee, by writing
to the Public Reference Room of the SEC, Washington, D.C. 20549-0102 or by
electronic request at the following E-mail address: [email protected]. You may
obtain information on the operation of the Public Reference Room by calling the
SEC at 202-942-8090.
Distributed by Funds Distributor Inc.
Investment Company Act o File No. 811-08741
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